InterOil Announces Next Exploration Well to be Drilled

TORONTO, ONTARIO--(CCNMatthews - Jan. 10, 2005) - InterOil Corporation (TSX:IOL) (AMEX:IOC) (ASX/POMSoX:IOC), a Canadian company with operations in Papua New Guinea announced today that it intends to commence the next well in its multi-well drilling program by the end of the first quarter of 2005.

This well is on the Black Bass Prospect in Petroleum Prospecting License (PPL) 236 in Papua New Guinea and is located approximately 100 miles (160 kilometres) northwest of Port Moresby. The primary target is a limestone reef which was identified by a recently conducted seismic survey. The depth of this reef is estimated to be 3,937 feet (1,200m).

All necessary regulatory approvals have been received and the Company has commenced preparation of the drill site. A drilling contract has been executed and arrangements are being made to mobilize a drilling rig to the site.

"We look forward to continuing our multi-well drilling program, commencing with the Black Bass Prospect. This prospect is particularly interesting to us from a strategic point of view because of its accessibility by road and its proximity to InterOil's refinery at Port Moresby," said Mr. Phil Mulacek, CEO of InterOil.

InterOil is developing a vertically integrated energy company whose primary focus is Papua New Guinea and the surrounding region. Its assets comprise an oil refinery, upstream petroleum exploration licenses, and retail and commercial distribution assets. The majority of the refined products from InterOil's refinery are secured by off-take contracts with Shell and InterOil's wholly-owned subsidiary, InterOil Products Limited. BP Singapore is InterOil's agent for crude oil supplied to the refinery. InterOil is also undertaking an extensive petroleum exploration program within its eight million acre license area located in Papua New Guinea.

InterOil's common shares trade on the Toronto Stock Exchange under the symbol IOL in Canadian dollars; on the American Stock Exchange under the symbol IOC in US dollars; and on the Australian Stock Exchange in CHESS Depositary Interests in Australian dollars under the symbol IOC which trade on a 10:1 basis to common shares. For more information please see the InterOil website at: www.interoil.com.

Cautionary Statements

This press release contains forward-looking statements. All statements, other than statements of historical facts, included in this release, including without limitation, statements regarding our drilling plans, business strategy, plans and objectives of management for future operations and those statements preceded by, followed by or that otherwise include the words "believe", "expects", "anticipates", "intends", "estimates" or similar expressions or variations on such expressions are forward-looking statements. The Company can give no assurances that such forward-looking statements will prove to be correct. Risks and uncertainties include, but are not limited to, the existence of underground deposits of commercial quantities of oil and gas; fluctuations in prices for oil and gas production; curtailments or delays in development due to mechanical, operating, marketing or other problems; capital expenditures that are either significantly higher or lower than anticipated because the actual cost of identified projects varied from original estimates; and from the number of exploration and development opportunities being greater or fewer than currently anticipated.

The Company currently has no reserves as defined under Canadian National Instrument 51-101 reserve definitions. See the Company's filings with the Canadian securities regulators for additional risks and information about the Company's business.